<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended June 30, 1996.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission File No. 0-16140
U.S. TRANSPORTATION SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Exact name of the Registrant as specified in Charter)
Nevada 34-1397328
- ------------------------ --------------------------
(State of Incorporation) (I.R.S. Employer ID Number)
33 W. Main Street, Suite 205, Elmsford, New York 10523
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number including Area Code: 914-345-3339
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES __X__ NO_____
As of May 9, 1996, there were 18,447,545 shares of Common Stock, $.01 par value,
net of treasury shares.
Transitional Small Business Disclosure Format
YES _____ NO__X__
<PAGE>
U. S. TRANSPORTATION SYSTEMS, INC.
AND SUBSIDIARIES
Index
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheet as of June 30, 1996 3-4
Consolidated Statements of Income for the Six
Months Ended June 30, 1996 and 1995 5
Consolidated Statements of Income for the Three
Months Ended June 30, 1996 and 1995 6
Consolidated Statements of Stockholders' Equity for
the Year Ended December 31, 1995 and the
Six Months Ended June 30, 1996 7-8
Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1996 and 1995 9-12
Notes to Consolidated Financial Statements 13-14
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 15
PART II. OTHER INFORMATION
Signatures 16
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
U.S. TRANSPORTATION SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
June 30, 1996
ASSETS
Current assets:
Cash and cash equivalents $ 1,427,404
Cash - restricted 147,178
Accounts receivable, net of allowance for doubtful
accounts of $321,000 3,896,922
Notes receivable 343,374
Net investment in sales-type leases 571,810
Inventories 920,189
Costs and estimated earnings in excess of billings 1,115,060
Prepaid and other assets 829,491
-----------
Total current assets 9,251,428
Property, plant and equipment:
Revenue equipment - highway coaches 7,740,064
Other 2,989,831
-----------
Total - at cost 10,729,895
Less: Accumulated depreciation 2,972,890
Property, plant and equipment - net 7,757,005
Assets held for resale 55,953
Other assets:
Net investment in sales-type leases 2,019,898
Goodwill, net of accumulated amortization of $587,298 4,949,346
Other intangible assets, principally operating rights - net
of accumulated amortization of $80,621 386,946
Notes receivable 385,077
Deferred taxes 750,000
Other assets 1,511,115
-----------
Total other assets 10,002,382
-----------
Total assets $27,066,768
===========
See notes to consolidated financial statements.
3
<PAGE>
U.S. TRANSPORTATION SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
June 30, 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Cash overdraft $ 1,056,578
Notes payable 4,713,633
Accounts payable 1,544,397
Accrued liabilities 629,453
Billings in excess of costs and estimated earnings 128,551
Due to related party 429,960
-----------
Total current liabilities 8,502,572
Long-term obligations, net of current maturities:
Notes payable 2,984,348
Due to related party 258,956
-----------
Total long-term obligations, net of current
maturities 3,243,304
Commitments and contingencies
Stockholders' equity:
Preferred stock - par value $.01 per share, redemption value
$10.00 per share:
Authorized - 10,000,000 shares
Issued and outstanding - 180,000 shares 1,800,000
Common stock - par value $.01 per share:
Authorized - 50,000,000 shares
Issued and outstanding - 19,357,545 shares 193,575
Additional paid-in capital 19,882,272
Stock subscription receivable (37,785)
Deferred compensation (604,018)
Accumulated deficit (5,913,152)
------------
Total stockholders' equity 15,320,892
------------
Total liabilities and stockholders' equity $ 27,066,768
============
See notes to consolidated financial statements.
4
<PAGE>
U. S. TRANSPORTATION SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Statements of Income
For the Six Months Ended June 30, 1996 and 1995
1996 1995
------ -------
Revenues $13,718,768 $7,086,473
----------- ----------
Expenses:
Cost of goods sold 3,673,512 797,829
Operating expenses 5,007,902 3,656,020
Selling, general and administrative 2,720,917 1,682,526
Depreciation 499,657 181,626
Amortization of intangible assets 337,666 51,113
Rent expense 535,865 109,547
----------- ----------
Total expenses 12,775,519 6,478,661
----------- ----------
Income from operations 943,249 607,812
----------- ----------
Other income (expenses):
Interest expense (280,893) (151,955)
Interest income 134,882 98,137
Gain (loss) on sales of assets 55,828 (157,060)
Other (18,583) 8,038
----------- ----------
Net other expenses (108,766) (202,840)
----------- ----------
Net income 834,483 404,972
Less: Preferred dividends 95,850 95,850
----------- ----------
Net income applicable to common shareholders $ 738,633 $ 309,122
========= =========
Earnings per common share $ .04 $ .05
========= =========
Weighted average common shares outstanding 17,708,489 6,855,252
========== =========
See notes to consolidated financial statements.
5
<PAGE>
U. S. TRANSPORTATION SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Statements of Income
For the Three Months Ended June 30, 1996 and 1995
1996 1995
------ -------
Revenues $ 7,202,642 $ 3,659,162
----------- -----------
Expenses:
Cost of goods sold 1,930,948 421,132
Operating expenses 2,618,934 1,796,436
Selling, general and administrative 1,431,388 847,665
Depreciation 286,328 149,834
Amortization of intangible assets 171,131 21,381
Rent expense 265,124 38,768
----------- -----------
Total expenses 6,703,853 3,275,216
----------- -----------
Operating income 498,789 383,946
----------- -----------
Other income (expenses):
Interest expense (147,343) (85,999)
Interest income 66,171 47,722
Gain (loss) on sales of assets 5,401 (117,612)
Other (10,200) (75)
----------- -----------
Net other expenses (85,971) (155,964)
----------- -----------
Net income 412,818 227,982
Less: Preferred dividends 47,925 47,925
----------- -----------
Net income applicable to common shareholders $ 364,893 $ 180,057
========= =========
Earnings per common share $ 0.02 $ 0.02
========= =========
Weighted average common shares outstanding 18,670,478 7,257,314
========= =========
See notes to consolidated financial statements.
6
<PAGE>
U. S. TRANSPORTATION SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
For the Year Ended December 31, 1995 and
the Six Months Ended June 30, 1996
<TABLE>
<CAPTION>
Common Stock Preferred Stock Additional
----------------------------------------------------- Paid-In
Shares Amount Shares Amount Capital
----------- --------- --------- -------- ---------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 7,333,190 $ 73,332 180,000 $ 1,800,000 $ 13,508,983
Preferred stock issuance -- -- 170,000 2,040,000 (1,073,524)
Preferred stock conversion 2,550,000 25,500 (170,000) (2,040,000) 2,014,500
Restricted stock grant issuance -- -- -- -- --
Stock options issued -- -- -- -- --
Preferred dividends 57,480 575 -- -- (575)
Common stock issued in connection with
purchase of Armstrong Freight Express 780,000 7,800 -- -- 557,700
Common stock issued in connection with
purchase of Trans-Lynx Express 116,539 1,165 -- -- 83,325
Common stock issued in connection with
purchase of Automated Solutions 1,800,000 18,000 -- -- 1,332,000
Common stock issued in exchange for consulting
services 335,000 3,350 -- -- 239,275
Common stock issued in connection with
contract settlement 50,000 500 -- -- 35,750
Stock options exercised 370,000 3,700 -- -- 247,475
Net income -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Balance, December 31, 1995 (carried forward) 13,392,209 $ 133,922 180,000 $ 1,800,000 $ 16,944,909
------------ ------------ ------------ ------------ ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Stock Sub- Deferred Retained
scription Compen- Earnings
Receivable sation (Deficit) Total
------------ ----------- ------------- ---------
<S> <C> <C>
Balance, December 31, 1994 $ -- $ (811,359) $ (7,555,263) $7,015,693
Preferred stock issuance -- -- -- 966,476
Preferred stock conversion -- -- -- --
Restricted stock grant issuance -- 135,667 -- 135,667
Stock options issued -- 17,188 -- 17,188
Preferred dividends -- -- (220,440) (220,440)
Common stock issued in connection with
purchase of Armstrong Freight Express -- -- -- 565,500
Common stock issued in connection with
purchase of Trans-Lynx Express -- -- -- 84,490
Common stock issued in connection with
purchase of Automated Solutions -- -- -- 1,350,000
Common stock issued in exchange for consulting
services -- -- -- 242,625
Common stock issued in connection with
contract settlement (36,250) -- -- --
Stock options exercised (254,035) -- -- (2,860)
Net income -- -- 1,123,918 1,123,918
------------ ------------ ------------ ------------
Balance, December 31, 1995 (carried forward) $ (290,285) $ 658,504) $ (6,651,785) $ 11,278,257
------------ ------------ ------------ ------------
</TABLE>
See notes to consolidated financial statements.
7
<PAGE>
U. S. TRANSPORTATION SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity (Concluded)
For the Year Ended December 31, 1995 and
the Six Months Ended June 30, 1996
<TABLE>
<CAPTION>
Common Stock Preferred Stock Additional
----------------------------------------------------- Paid-In
Shares Amount Shares Amount Capital
----------- --------- --------- -------- ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1995 (brought forward) 13,392,209 $ 133,922 180,000 $ 1,800,000 $ 16,944,909
Preferred stock issuance -- -- 300 300,000 (43,272)
Preferred dividends -- -- -- -- --
Debentures converted into common stock 4,522,002 45,220 -- -- 1,731,068
Preferred stock conversion 533,334 5,333 (300) (300,000) 294,667
Restricted stock grant issuance -- -- -- -- --
Stock option issued -- -- -- -- --
Repurchase of common stock (285,000) (2,850) -- -- (210,900)
Common stock issued in connection with
purchase of Krogel 110,000 1,100 -- -- 81,400
Net proceeds from warrants exercised 200,000 2,000 -- -- 73,000
Proceeds from equity portion of bridge loan -- -- -- -- 344,000
Stock options exercised 160,000 1,600 -- -- 130,900
Common stock issued in connection with
a covenant not to compete 100,000 1,000 -- -- 74,000
Common stock issued in exchange for
consulting services 625,000 6,250 -- -- 462,500
Net income -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Balance, June 30, 1996 19,357,545 $ 193,575 180,000 $ 1,800,000 $ 19,882,272
============ ============ ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Stock Sub- Deferred Retained
scription Compen- Earnings
Receivable sation (Deficit) Total
----------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Balance, December 31, 1995 (brought forward) $ (290,285) $ (658,504) $ (6,651,785) $ 11,278,257
------------
Preferred stock issuance -- -- -- 256,728
Preferred dividends -- -- (95,850) (95,850)
Debentures converted into common stock -- -- -- 1,776,288
Preferred stock conversion -- -- -- --
Restricted stock grant issuance -- 54,486 -- 54,486
Stock option issued -- 13,368 -- 13,368
Repurchase of common stock -- -- -- (213,750)
Common stock issued in connection with
purchase of Krogel -- -- -- 82,500
Net proceeds from warrants exercised -- -- -- 75,000
Proceeds from equity portion of bridge loan -- -- -- 344,000
Stock options exercised -- -- -- 132,500
Common stock issued in connection with
a covenant not to compete -- -- -- 75,000
Common stock issued in exchange for
consulting services 252,500 (13,368) -- 707,882
Net income -- -- 834,483 834,483
------------ ------------ ------------ ------------
Balance, June 30, 1996 $ (37,785) $ (604,018) $ (5,913,152) $ 15,320,892
============ ============ ============ ============
</TABLE>
See notes to consolidated financial statements.
8
<PAGE>
U.S. TRANSPORTATION SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1996 and 1995
1996 1995
--------- --------
Operating activities:
Net income from continuing operations $ 834,483 $ 404,972
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 837,324 32,739
(Gain) loss on sale of assets (55,828) 157,060
Change in assets and liabilities:
Accounts receivable (1,046,064) 149,756
Inventories 56,714 (74,479)
Other receivables 39,174 7,783
Costs and estimated earnings in excess
of billings (871,765) -
Prepaid and other assets (35,742) (197,408)
Accounts payable (328,965) (295,747)
Billings in excess of costs and estimated
earnings (225,961) -
Accrued liabilities (109,669) (77,704)
--------- ---------
Net cash provided by (used in) continuing
operations (906,299) 306,972
--------- ---------
Discontinued operations:
Adjustments - change in net assets and liabilities
of discontinued operations and net cash used in
discontinued operations - (289,046)
--------- ---------
Net cash provided by (used in) operating
activities (carried forward) $ (906,299) $ 17,926
--------- ---------
See notes to consolidated financial statements.
9
<PAGE>
U.S. TRANSPORTATION SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
For the Six Months Ended June 30, 1996 and 1995
1996 1995
--------- --------
Net cash provided by (used in) operating activities
(brought forward) $ (906,299) $ 17,926
----------- -----------
Investing activities:
Capital expenditures (1,317,481) (154,196)
Acquisition of intangible assets (150,000) --
Proceeds from sale of assets 10,500 798,922
Transfers from (to) cash - restricted 18,575 (4,590)
Advances on notes and leases receivable -- (252,405)
Collections of notes and leases receivable 170,030 357,824
Other (95,614) (35,542)
----------- -----------
Net cash provided by (used in) investing
activities (1,363,990) 710,013
----------- -----------
Financing activities:
Principal payments to related party (251,934) (100,000)
Advances from related party 338,555 134,875
Cash overdraft 1,056,578 (35,570)
Proceeds from issuance of preferred stock 256,728 1,555,933
Proceeds from bridge loan 982,000 --
Preferred dividend (95,850) --
Proceeds from options and warrants 207,500 --
Borrowings on debt 4,411,218 4,301,528
Principal payments on long-term debt (4,934,891) (5,352,981)
----------- -----------
Net cash provided by financing activities 1,969,904 503,785
----------- -----------
Net (decrease) increase in cash and cash equivalents (300,385) 1,231,724
Cash and cash equivalents, beginning of year 1,727,789 --
----------- -----------
Cash and cash equivalents, end of period $ 1,427,404 $ 1,231,724
=========== ===========
See notes to consolidated financial statements.
10
<PAGE>
U.S. TRANSPORTATION SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
For the Six Months Ended June 30, 1996 and 1995
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
1996 1995
-------- -----------
Cash paid during the period for:
Interest $281,000 $210,000
======== ========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES
In March 1995, the Company sold a substantial portion of the assets
of Suncoast Transportation for $25,000 cash and a promissory note of $175,000.
During the six months ended June 30, 1996 and 1995, the Company
sold buses in exchange for $96,547 and $898,118, respectively, of sales-type
financing leases receivable.
During the six months ended June 30, 1996 and 1995, the Company
acquired revenue equipment utilizing long-term debt of $3,400,999 and $149,137,
respectively.
During the six months ended June 30, 1996, holders of $1,776,288 of
convertible debentures converted such debentures into 4,522,002 shares of the
Company's common stock.
During the six months ended June 30, 1996, the Company converted
300 shares of convertible preferred stock into 533,334 shares of common stock.
During the six months ended June 30, 1996, the Company acquired
285,000 shares of its common stock for $213,750.
During the six months ended June 30, 1996 and 1995, the Company
accrued $95,850 of preferred dividends in both periods.
In February 1996, the Company issued 110,000 shares of its common
stock valued at $82,500, as part of its acquisition of certain personal property
and contract rights from Krogel Freight Systems of Tampa, Inc. and Krogel Air
Freight, Inc.
See notes to consolidated financial statements.
11
<PAGE>
U.S. TRANSPORTATION SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Concluded)
For the Six Months Ended June 30, 1996 and 1995
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES
In June 1995, the Company acquired Armstrong Freight Services in
exchange for 780,000 shares of its common stock.
In June 1996, the Company issued 100,000 shares of common stock in
connection with a covenant not to compete.
In June 1996, the Company issued 625,000 shares of common stock and
forgave notes aggregating $252,500 in exchange for a consulting agreement.
See notes to consolidated financial statements.
12
<PAGE>
U.S. TRANSPORTATION SYSTEMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1 - Management's Representation
In the opinion of management, the accompanying unaudited financial
statements present fairly, in all material respects, the financial position of
U.S. Transportation Systems, Inc. and Subsidiaries and the results of their
operations and their cash flows for the six months ended June 30, 1996 and 1995,
and, accordingly, all adjustments (which include only normal recurring
adjustments) necessary to permit that fair presentation has been made. Certain
information and footnote disclosures normally required by financial accounting
principles have been condensed or omitted. It is suggested that these statements
be read in conjunction with the financial statements and notes thereto included
in the Company's December 31, 1995 Form 10-KSB report. The results of operations
for the period ended June 30, 1996 are not necessarily indicative of the
operating results for the full year.
Note 2 - Capitalization
In January 1996, the Company issued $300,000 of convertible
preferred stock, which were converted into 533,334 shares of common stock in
March 1996.
On February 21, 1996, the Board of Directors approved an increase
in the authorized common stock shares from 20,000,000 to 50,000,000 shares.
On April 18, 1996, the Company issued $1,200,000 of 5% subordinated
promissory notes and bridge units. Simultaneously with the issuance of this
note, the holder hereof is entitled to receive such number of shares of the
Company's common stock and common stock purchase warrants, as equals (a) 35% of
the principal amount of this note, divided by the lesser of the closing high bid
price of the common stock (the "Bid Price") on the day on which a registration
statement pursuant to the Securities Act of 1993, registering such Unit
Securities is declared effective, or the price of the units to be sold by the
Company in its proposed secondary public offering pursuant to such registration
statement, if such effective date shall occur on or prior to four months from
the final closing; or (b) 40% of the principal amount of this note divided by
the lesser of the Bid Price or the offering price on the effective date, if such
effective date shall occur between five months and seven months from the final
closing; or (c) 50% of the principal amount of this note divided by the lesser
of the Bid Price or the offering price on the effective date, if such effective
date shall occur on or after the end of seven months from the final closing. In
the event that either (a) these notes have not been paid on or prior to the
maturity date; or (b) the unit securities have not been registered by on or
prior to the end of seven months from the final closing, then, at the sole
option of the holder of this note, the entire
13
<PAGE>
U.S. TRANSPORTATION SYSTEMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 2 - Capitalization (Continued)
principal amount of this note may be converted into such number of shares of
common stock and warrants as equals the principal amount of this note, divided
by 50% of the Bid Price on the day prior to the effective date.
Note 3 - Acquisition
On February 23, 1996, the Company purchased certain personal
property, intangible assets and contract rights from Krogel Air Freight, Inc.
and Krogel Freight Systems of Tampa, Inc. for $150,000 in cash and 110,000
shares of common stock. This acquisition was accounted for as a purchase.
On June 24, 1996, the Company purchased certain assets from Jackson
& Johnson, Inc. for $160,000 in cash and the assumption of approximately
$2,930,000 in accrued debt. This acquisition will be accounted for as a
purchase.
14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Six Months Ended June 30, 1996 vs.
Six Months Ended June 30, 1995
Results of Operations
The Company's revenue for the first six months of 1996 increased
significantly from the same period in 1995, from $7,086,473 in 1995 to
$13,718,768 in 1996, i.e., by 94 percent. This increase substantially resulted
from the acquisition of Armstrong Freight in June 1995, Trans Lynx in July 1995,
Automated Solutions (ASI) in November 1995, Krogel in February 1996 and Jackson
& Johnson in June 1996.
Armstrong's revenue (combined with Trans Lynx and Krogel, the
operations of which acquisitions have been merged into Armstrong), for the six
months ended June 30, 1996 was $3,211,031. ASI's revenue for the six months
ended June 30, 1996 was $3,469,582. Jackson & Johnson's revenue for the six
months ended June 30, 1996 was $42,115.
At the end of 1993, the Company's Board of Directors decided to
terminate the Company's charter bus operations. Charter operations had produced
very small profit margins in recent years and only when undertaken in
conjunction with contract operations. All charter operations have been
discontinued, sold or otherwise dissolved by the end of 1995. As of June 30,
1996, the only assets remaining from the discontinued segment was one (1) motor
coach bus with a book value of $55,953.
Liquidity and Capital Resources
The Company's working capital of $748,856 at June 30, 1996
represented a decrease of $824,303 from the Company's working capital of
$1,416,261 at December 31, 1995. This decrease is chiefly the result of
utilizing working capital for capital expenditures in the second quarter of
1996.
Cash flow from operations was $1,615,978 for the six months ended
June 30, 1996 before the application of funds to working capital components. The
Company anticipates positive cash flow from continuing operations in the
foreseeable future. Further, the Company anticipates that cash flow from the
discontinued charter segment will continue to be positive as the Company
disposes of this segment's assets.
The Company has no significant commitments at this time which would
require it to expend capital and believes its current facilities and capital
equipment are adequate for the Company as currently structured.
15
<PAGE>
U.S. TRANSPORTATION SYSTEMS, INC.
AND SUBSIDIARIES
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed on its
behalf on August 14, 1996 by the undersigned, thereunto duly authorized.
U.S. TRANSPORTATION SYSTEMS, INC.
/s/ Michael Margolies
---------------------------------------
MICHAEL MARGOLIES
CHIEF EXECUTIVE OFFICER
/s/ Terry A. Watkins
---------------------------------------
TERRY A. WATKINS
CHIEF FINANCIAL OFFICER
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information from the audited financial
statements of U.S. Transportation Systems, Inc. for the quarter ended June 30,
1996 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,427,404
<SECURITIES> 0
<RECEIVABLES> 3,896,922
<ALLOWANCES> 321,000
<INVENTORY> 920,189
<CURRENT-ASSETS> 9,251,428
<PP&E> 10,729,895
<DEPRECIATION> 2,972,890
<TOTAL-ASSETS> 27,066,768
<CURRENT-LIABILITIES> 8,502,572
<BONDS> 2,984,348
0
1,800,000
<COMMON> 193,575
<OTHER-SE> 19,882,272
<TOTAL-LIABILITY-AND-EQUITY> 27,066,768
<SALES> 13,718,768
<TOTAL-REVENUES> 13,718,768
<CGS> 3,673,512
<TOTAL-COSTS> 12,775,519
<OTHER-EXPENSES> (108,766)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (280,893)
<INCOME-PRETAX> 834,483
<INCOME-TAX> 0
<INCOME-CONTINUING> 834,483
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 834,483
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
